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oil and gas The industry’s plan to persuade the world to switch from natural gas to hydrogen made from natural gas is proceeding for an unexpected reason: economics.
As the climate emergency becomes impossible to ignore and the world begins to move away from natural gas, the industry has promoted a new technology: so-called blue hydrogen. Blue hydrogen produces no carbon emissions when burned or converted into electricity, but the main component in the production of blue hydrogen is methane, the most potent greenhouse gas.
It is not currently possible to produce clean blue hydrogen on a commercial scale, and it is important to acknowledge the risks of trying. But the market is also playing a role in weaning oil and gas away from this dangerous endeavor.
One of the major arguments against completely phasing out fossil fuels and against clean energy like green hydrogen – a clean form of hydrogen made from renewable energy – has been that we cannot afford it. But the market logic is changing now, thanks to a sharp drop in the cost of producing renewable energy, which accounts for 75 percent of the cost of making green hydrogen. At the same time, the cost of producing green hydrogen is also falling rapidly, while natural gas prices have risen around the world.
This has resulted in a situation no one had predicted: in Europe, green hydrogen is now cheaper than liquefied natural gas. And oil and gas companies, in turn, are increasingly investing in green hydrogen instead of using methane to produce blue hydrogen.
This is a remarkable development. As recently as September 2020, oil major Shell was making the case that “blue hydrogen could help build demand and transportation networks for hydrogen while the cost of green hydrogen falls.” In an article this month in the New Statesman that claimed green hydrogen was not viable, Bethan Vasey, energy transition manager for Shell’s upstream UK division, said blue hydrogen technology is “now ready for large-scale deployment.” Meanwhile, Shell just announced that it is building the largest green hydrogen production facility in Europe. Shell could have built a blue hydrogen feature, but it chose the green one.
the industry It worked hard for more than a decade to sell the idea that natural gas is a clean fuel that could reduce emissions and help address fossil fuel-driven climate change. As The Intercept reported in 2019, the American Petroleum Institute paid to put the sponsored material in the Washington Post, arguing that.
Yet this argument was not correct, and thankfully, growing evidence that methane emissions must be reduced quickly has prompted a coalition of countries to sign the Global Methane Pledge. Highlighting the pledge at a November 2021 event, President Joe Biden said that “the most important thing we can do in this pivotal decade is to keep our methane emissions down to 1.5 degrees as quickly as possible.” have to reduce.”
Actually, the world is facing a methane emergency. Methane is a potent greenhouse gas with a warming potential of more than 80 times that of carbon dioxide in the first 20 years that the atmosphere has. When the climate impacts of methane emissions associated with natural gas production and distribution are included, natural gas can be as bad for the climate as coal. Methane has contributed to about 40 percent of total global warming so far.
In April, the National Oceanic and Atmospheric Administration reported that global methane levels had increased at a record pace in 2021. There is no prospect of slowing global warming if methane emissions are not reduced quickly. Putting the planet’s future at stake when increasing methane production to make blue hydrogen, which is not a clean fuel, could have disastrous consequences.
The natural gas industry knows that renewable energy poses a potential threat to its business, as it is now. quite cheap To produce electricity from solar power compared to building new gas power plants. The U.S. Energy Information Administration notes that most of the new electricity generation created in the U.S. is renewable, not gas, and that it is reducing the amount of gas used for electricity generation, a trend that is expected to continue. As natural gas began to lose market share to low-cost renewable energy, the industry came up with a way to repackage methane into a cleaner form: blue hydrogen. And it is being touted as a potential savior of oil and gas. Last September, I wrote “Hydrogen and Carbon Capture: Will They Save the Natural Gas Industry?”
However, for blue hydrogen to be a truly clean fuel, there must be almost no carbon dioxide or methane emissions in its production – two very unlikely outcomes. Even proponents of blue hydrogen acknowledge that methane emissions are a challenge. For blue hydrogen to be considered clean, emissions must be between 0.1 percent and 0.2 percent of total methane for methane production.
Hydrogen is often considered a clean fuel because it does not emit carbon dioxide when burned or converted into electricity in a fuel cell. This is the reason for the current hype about the potential of a clean hydrogen economy. Yet most of the world’s hydrogen currently originates from methane and is known as gray hydrogen. The production of gray hydrogen contributes 2 percent of the world’s total carbon dioxide emissions and also contributes to methane emissions. Green hydrogen, on the other hand, is derived from water and clean electricity, resulting in no carbon dioxide or methane emissions.
Blue hydrogen can be clean – If It has been able to restrict its methane emissions and successfully capture 95 percent of its carbon emissions from hydrogen production. On paper, it may be a relatively clean fuel if it can be obtained, but in the real world, it is not.
Carbon capture in commercial facilities has failed to come close to 95 percent capture rates, and the natural gas industry produces large amounts of methane emissions through both its normal operation and frequent leaks. Blue hydrogen also requires that the captured carbon be stored indefinitely without leaking. There is little evidence that this is possible on a large scale.
Blue hydrogen could be clean – if it is able to restrict its methane emissions and successfully capture 95 percent of the carbon emissions from hydrogen production. It is not doable.
And even if it can be achieved, it will be costly. As Sen. Joe Manchin, DW.VA, said last year, “I would love to capture carbon, but we don’t have the technology because we haven’t really reached that point. And it’s so expensive that it made it nearly impossible.” gives.”
A study by Robert Howarth, professor of ecology and environmental biology at Cornell University, and Mark Jacobson, professor of civil and environmental engineering at Stanford University, found that greenhouse gas emissions from the production of blue hydrogen were “significantly higher” and concluded that “climate It appears difficult to justify the use of blue hydrogen on the basis of Howarth and Jacobson noted that their analysis assumed that the captured carbon could be stored indefinitely, which they believe is an “optimistic and unproven assumption”.
In March, a study found that methane emissions in New Mexico’s Permian Basin are more than 9 percent — 90 times the 0.1 percent target. In June, the Washington Post reported that another analysis found that methane emissions in the Permian had risen 47 percent from a year earlier. The US oil and gas industry has proven that it has no capacity to produce methane with an emissions rate of less than 1 percent, and 0.1 percent is simply not plausible.
Industry knows that if it cannot connect the world to hydrogen made from methane, it faces a falling market due to economic competition from renewable energy. In April, the Institute for Energy Economics and Financial Analysis released a report suggesting that gas-powered electricity peaked in the US in 2020 and will begin to decline as it is replaced with cheaper renewable energy. Until recently, it was argued that green hydrogen was too expensive, so blue hydrogen was necessary. Without that logic, there is no reason for blue hydrogen to exist.
Hydrogen Europe, a trade group for the hydrogen industry, includes many members who are supporters of blue hydrogen, such as the oil and gas company Equinor. Recharge pointed out that at the recent Euraelectric Power Summit, Hydrogen Europe CEO Jorgo Chatzimarkakis said that “blue hydrogen doesn’t sell, it’s too expensive.”
Until recently, it was argued that green hydrogen was too expensive, so blue hydrogen was necessary. Without that logic, there is no reason for blue hydrogen to exist.
Like Shell, other major oil companies are also working on green hydrogen instead of blue, with plans for multi-billion dollar investments in Australia and India. This week, oil company BP agreed to a joint venture with renewable energy company Iberdrola to build several large green hydrogen production facilities in Europe.
The green hydrogen industry is certainly benefiting from the recent massive increase in the price of natural gas, which is likely to be a new normal for global natural gas prices. However, with the low cost of renewable energy coupled with rapidly falling prices for the electrolyzers used to make green hydrogen, it was inevitable that at some point in the near future green hydrogen would be cost-competitive with methane-based hydrogen. . A potential additional boost for the green hydrogen industry is the recently announced Inflation Reduction Act of 2022, which includes production incentives that Recharge reports will make US green hydrogen the cheapest type of hydrogen in the world. This should lead to a rapid increase in investment in the US green hydrogen industry.
Clean hydrogen will be needed to make the global economy carbon-free. The first priority is to replace existing gray hydrogen production, which would effectively eliminate the equivalent carbon emissions of the whole of Germany. Hydrogen is also likely to be essential to decarbonize the steel industry and shows promise in shipping and aviation – all very emissions-intensive industries.
If investment decisions are made based solely on the need to reduce carbon dioxide and methane emissions, then blue hydrogen will never be an option. The reality is that most investments are being made not to save the world, but to make money. That’s why Blue Hydrogen isn’t getting the attention of global investors: It’s not a smart investment.
For a long time, the fossil fuel industry had a convincing argument that it could provide the cheapest energy. As the current energy inflation crisis clearly shows, that era is over, and the push for blue hydrogen must end with it.